An inadequate regulatory regime, a Government tax framework which inflated the property bubble and a banking leadership which engaged in reckless competition made the impact of the global recession immeasurably worse, the Irish Bank Officials’ Association (IBOA) said today.
Welcoming the two reports on the banking crisis, which show that the government's macroeconomic and budgetary policies contributed to an overheating of the economy, the IBOA warned: "they will be of little more than academic value unless the Government follows up wholeheartedly with the necessary reforms".
The Government has begun to address many of the key shortcomings in the regulatory framework, but it must go further, IBOA general secretary, Larry Broderick said.
“It is vital, therefore, that the Commission of Inquiry to be established shortly by the Government should not only evaluate the two reports published today but also set down a programme of ongoing reform for the future,” he said.
Sinn Féin Dáil leader Caoimhghín Ó Caoláin described the two reports as “an indictment of Government policy” and of Brian Cowen’s role as Finance Minister, on the financial regulator, on rating agencies and on bankers.
Speaking today after the publication of the reports Mr Ó Caoláin said: “These reports show how the Government recklessly managed our economy and led us directly into the current financial crisis”.
The reports will provide a good framework for a commission of inquiry “to delve deeply into the many issues of concern that surround our banking crisis," Green Party finance spokesman Dan Boyle said.
Mr Boyle said the reports marked the beginning of a process to find how the Irish banking system arrived at where it is today.
Deputy leader of the Labour Party, Joan Burton, said the Regling-Watson report highlights the role played by Government tax incentives in creating and sustaining the reckless scale of bank lending
for property.
"The Taoiseach has belatedly acknowledged his mistake in allowing these tax measures to remain in place for an extended period when it was clear that they served no economic or social purpose".
The buck has to stop with Ministers, including Mr Cowen, because they had general responsibility to protect the public interest in the operation of regulatory agencies, she added.
The Government welcomed the preliminary reports, saying the findings and conclusions now provide the basis for the preparation of terms of reference for a statutory Commission of Investigation.
The Government said the reports have drawn attention to a number of significant issues that require further investigation, including bank practices, risk management and governance failures in the covered institutions.